Factor endowments-the cost and quality of factors of production-are a prime determinant of the competitive advantage that certain countries have in certain industries.

Question

Quizplus · Accepted Answer

This statement accurately reflects the theory of comparative advantage, which suggests that countries will specialize in producing goods and services that rely on factors of production that are abundant and relatively cheaper in their country. This creates a competitive advantage in those industries.

Factor Endowments-The Cost and Quality of Factors of Production-Are a Prime